KENDRAPARA URBAN CO-OPERATIVE BANK LTD,KENDRAPADA vs. ACIT, CUTTACK

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No320/CTK/2013 Assessment Year : 2009-10

Kendrapara Urban Co.op. Vs. ACIT Circle 1(2), Cuttack Bank Ltd.,. Main Branch, Tinimuhani Square, Kendrapara PAN/GIR No. AAATK 8347 E (Appellant) .. ( Respondent)

Assessee by : None Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 22/05/ 2017 Date of Pronouncement : 24 /05/ 2017

O R D E R Per Pavan Kumar Gadale, JM This is an appeal filed by the assessee against the order of CIT(A)-

Cuttack, dated 25.3.2013, for the assessment year 2009-10.

the assessee nor any application for adjournment was filed. Since the

notice has been served on the assessee and the appeal relates to year

2013, we consider it appropriate to dispose of the appeal on the basis of

materials available on record and considering the submission of ld D.R.

2 ITA No. 320/CT K/ 2013 Asse ssment Year : 20 09- 10 3. The assessee has raised Ground Nos.1 & 2 in respect of issue of

notice u/s.143(2) of the Act as gross violation of provisions and illegal. We

find that this ground of appeal does not emanates out of the order of the

CIT(A) and there is no contention of the assessee on the of violation of

provisions on illegality of issue of notice before the Assessing Officer and

we treat this ground of appeal is out of purview of CIT(A)’s order and

dismiss the same.

are against the disallowance made by the Assessing Officer

u/s.36(1)(viia)(a) of the Act and confirmed by the CIT(A).

Banking and filed the Return of income on 29.9.2009 disclosing total

income of Rs.24,56,450/-. Subsequently, the assessee had filed revised

return on 1.2.2011. The case was selected for scrutiny under CASS and

notices u/s.142(1) and u/s.143(2) were issued to the assessee. In

compliance to the notices, ld A.R.of the assessee produced books of account

and filed written submissions and explanations and the case was discussed.

The Assessing Officer on perusal of financial statements found that the

assessee has debited several provisions in respect of provision for bad &

doubtful asset NPA of Rs.25,02,000/- and provision for recoveries of

Rs.24,87,288/-. The Assessing Officer considered the written submissions

filed by the assessee on 21.11.2011 explaining the applicability of section

36(1)(viia)(a) of the Act. Whereas the Assessing Officer perused the

3 ITA No. 320/CT K/ 2013 Asse ssment Year : 20 09- 10 provisions and came to the conclusion that the provisions of bad and

doubtful debts in respect of scheduled bank or non-scheduled bank or co-

operative bank is allowed 7.5% of total income and made a calculation at

para 2.2 of the assessment order and unilaterally concluded that the

assessee has availed these deductions in the immediately preceding

financial year. Therefore, the assessee should be allowed only provision

for bad and doubtful debts to the extent of Rs.5,68,330/- and disallowed

the claim of Rs.51,62,958/- and passed order u/s.143(3) of the Act on

23.12.2011.

before the CIT(A). In the appellate proceedings, the ld A.R. of the argued

and reiterated the submissions made before the Assessing Officer whereas

the CIT(A) considered the ground and dealt on the disputed issues based

on the findings of the Assessing officer and contention of the assessee and

observed that the population of Pattamundai Branch is 32724 which is

exceeding 10,000. Ld CIT(A) also perused the final audit report of the

assessee for the year 2008-09 in respect of business activity and observed

that the case of the assessee does not fall under the purview of section

36(1)(viia). He also relied on the CBDT circular page 4 of the impugned

order. Since the population of the branch is exceeding more than 10,000

in the rural branch, the assessee is not entitled for deduction for claim of

provisions of bad and doubtful debts of Rs.25,02,000/- and also there is no

technical report of provision for recoveries of Rs.24,87,288/- whereas the

provisions are to be deal with as per the accounting Standard issued by

4 ITA No. 320/CT K/ 2013 Asse ssment Year : 20 09- 10 ICAI. With these observations, the CIT(A) confirmed the addition made by

the Assessing Officer and partly allowed the appeal.

appeal before us. Since none appeared on behalf of the assessee, we heard

ld D.R. in respect of provisions of section 36(1)(viia)(a) whereas the

Assessing Officer has made the addition based on the violation of provisions

of section and claims made in preceding financial year and prayed for

dismissal of the appeal of the assessee.

submissions of ld D.R on the grounds raised before us. We find on perusal

of the impugned appellate order that the CIT(A) has dealt the disputed

issue on a different perspective of population of the rural branch, which

exceeded 10,000. The Ld CIT(A) has exhaustively dealt on the circular of

CBDT and judicial decision on the advances of rural banking and finally

concluded that the assessee has not complied with the conditions and relied

on the Audit report irrespective of the fact that there is no remand report

nor any findings of the Assessing Officer regarding population of rural

branch in the assessment proceedings. We find that this important aspect

was not discussed or any iota of findings in the assessment order. We

considering the apparent facts and material on record are of the view that

the CIT(A) has dealt the issue on a different footing other than the findings

given by the Assessing officer. Though the powers of the CIT(A) are co-

terminus with that of the Assessing Officer, since the assessee being a co-

5 ITA No. 320/CT K/ 2013 Asse ssment Year : 20 09- 10 operative bank and its activities are mainly financing the farmers in the

rural areas, we in the interest of justice, set aside the order of the CIT(A)

and remit the entire disputed issues to the file of the Assessing Officer to

examine the deduction claimed as per the provisions of section

36(1)(viia)(a) of the Act and decide afresh. Further, the assessee should

be provided adequate opportunity of hearing and shall co-operate in

submitting the information.

purposes.

Order pronounced in the open court on 24 /05/2017 in the presence of parties. Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 24 /05/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Kendrapara Urban Co.op. Bank Ltd.,. Main Branch, Tinimuhani Square, Kendrapara 2. The Respondent. ACIT Circle 1(2), Cuttack 3. The CIT, Cuttack 4. Pr.CIT, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//

SR.PRIVATE SECRETARY ITAT, Cuttack